Wednesday, 12th December 2018

The model score today is stuck at -85. This means that the market is not improving internally. Nothing has changed in the spreads, despite the decent intra-day rally off the lows. Quite simply all the spread prices are so far below the relevant moving averages that small rallies just do nothing to improve the score. It is still correct, in my opinion, to avoid risk assets, even if the next couple of days could easily be mildly positive.

Unless the market now stabilizes at higher levels, the asset spreads utilized in the model suggest this will be a temporary reprieve, with much worse to come eventually.

Owners of DRE, UAA & PSA should examine whether it is worth holding these stocks, as the position is rapidly deteriorating in those names.

Our asset allocation is today long SPY as the Counter-trend model has given a buy signal. This signal has a risk tolerance of -3% to +5% and will be out of the market by day 15 if neither is achieved.

I would still advise extreme caution and lightening up of individual names which are underperforming the market into rallies.

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